MARGINAL UTILITY TOTAL UTILITY


 marginal utility
total utility
1.      Meaning: -
Marginal utility is the additional utility derived from consuming additional unit of consumption.

2.      Formula: -
MUn = TUn –TUn-1.

3.      Relationship: -
·         Marginal utility continuously diminishes.

·         When Marginal utility becomes Zero
·         When Marginal utility becomes negative.

Total utility is the sum total of utilities derived from the consumption of all units in a given stock of a commodity.


TU = Σ MU


·         Whereas, total utility initially increases but at a diminishing rate
·         Total utility is the maximum.
·         Total utility starts diminishing.